To put it in simple words, PBX stands for Private Branch Exchange. A PBX system is a private telephone network that is mainly used within a business setting and it allows users to talk to each other, internally or externally. This means that the employees can communicate with each other by calling each other via their extension number or they can call external parties such as clients, prospective clients and other stakeholders involved in the business. 

Traditionally, PBX systems operated through physical handsets that are connected by multiple cables. This means that if a business has hundreds of employees, they would need hundreds of separate lines to connect everyone with each other. Those hundreds of lines are connected to a literal "box-on-the-wall" that can be located on the business's premises. The business is then being billed by their local phone company for the use of all these lines, just to have their employees talk to each other. Paying for hundreds of individual phone lines is obviously not cost effective and it can spiral into an absolute nightmare, for both the customer and the business, when not maintained properly.